Codinal theory - consumer choice concernin utility, Macroeconomics

Ordinal Theory:

A Short Note In ordinal approach, utility is measured ordinally i.e., qualitatively (not numerically or quantitatively). Alternatively, consumer can rank her preferences according to the order she wants to compare but not in terms of the different amount. It's a qualitative measure and therefore more realistic measurement of utility or satisfaction. There are two different approaches of ordinal theory, viz.,

1) Indifference curve approach 

2) Revealed preference approach 

Indifference Curve Approach:

Indifference curve is constructed by taking utility level constant, so different indifference curves imply  different level of utility for same consumer. The equilibrium is achieved when indifference curve become tangent to the budget line. 

Revealed Preference Approach:  In revealed preference approach, consumer equilibrium can be found by ranking different bundle of goods in the commodity space. Given the budget constraint, consumer chooses the best bundle for which her utility will maximise. This theory was originally constructed by the famous economist Paul. A. Samuelson.  

Posted Date: 10/26/2012 2:21:54 AM | Location : United States







Related Discussions:- Codinal theory - consumer choice concernin utility, Assignment Help, Ask Question on Codinal theory - consumer choice concernin utility, Get Answer, Expert's Help, Codinal theory - consumer choice concernin utility Discussions

Write discussion on Codinal theory - consumer choice concernin utility
Your posts are moderated
Related Questions
A stock investor would like to have an idea concerning the average return of stocks that are traded on a certain exchange. In a sample of 99 stocks, the average return was 9 percen

Define the Consumer Prices Index Every month, the Office for National Statistics (ONS) collects information on about 120,000 prices for a 'shopping basket' of about 650 goods a

If the price of DVD players decreases, we can expect that the demand for DVDs will: a. increase. b. be unaffected. c. shift left. d. Decrease

Summary of the Phillips curves In neo-classical synthesis, augmented Phillips curve is known as the short-run Phillips curve. It is presumed to be stable as long as expectation

Trends in current account: A  glance at  the net invisible  account suggests that its  ever-  rising  trend  from 2000-01 did not  only support  the  massive trade deficit but


The IS-curve in the AS-AD model The IS-curve is not affected by P in the AS-AD model We can define an IS-curve in the AS-AD model similarly to

Explain about the elasticity and total revenue. Elasticity and Total Revenue: a. When demand for a good is elastic, a raise in price decreases total revenue. Then Sales effe

Unemployment classification Economists sometimes differentiate between different types of unemployment. There are many type of ways of classifying unemployment however the foll

Price 10,9,8,7,6,5,4,3,2,1 QD 0,1,2,3,4,5,6,7,8,9,10 TR? Ed?.